Clarification on section 80EEA

 

Understand section 80EEA.

Given below the extract of the law.

(1) In computing the total income of an assessee, being an individual not eligible to claim deduction under section 80EE, there shall be deducted, in accordance with and subject to the provisions of this section, interest payable on loan taken by him from any financial institution for the purpose of acquisition of a residential house property.

(2) The deduction under sub-section (1) shall not exceed one lakh and fifty thousand rupees and shall be allowed in computing the total income of the individual for the assessment year beginning on the 1st day of April, 2020 and subsequent assessment years.

(3) The deduction under sub-section (1) shall be subject to the following conditions, namely:—

 (i)  the loan has been sanctioned by the financial institution during the period beginning on the 1st day of April, 2019 and ending on the 31st day of March, 23[2020];

 (ii)  the stamp duty value of residential house property does not exceed forty-five lakh rupees;

(iii)  the assessee does not own any residential house property on the date of sanction of loan.

(4) Where a deduction under this section is allowed for any interest referred to in sub-section (1), deduction shall not be allowed in respect of such interest under any other provision of this Act for the same or any other assessment year – This means that the deduction for the same interest cannot be claimed twice. 

(5) For the purposes of this section,—

(a)  the expression "financial institution" shall have the meaning assigned to it in clause (a) of sub-section (5) of section 80EE;

(b)  the expression "stamp duty value" means value adopted or assessed or assessable by any authority of the Central Government or a State Government for the purpose of payment of stamp duty in respect of an immovable property.

 

1.     Deduction u/s 80EEA is allowable over even if deduction u/s section 24(b) has been claimed and it is allowable for the same loan.  However, when making the claim for deduction, the assesse has to first exhaust the limit u/s 24 and then if there is any unclaimed interest balance left, that can be claimed u/s 80EEA.   

 

Where a deduction under this section is allowed for any interest referred to in sub-section (1), deduction shall not be allowed in respect of such interest under any other provision of this Act for the same or any other assessment year – This means that the deduction for the same interest cannot be claimed twice.  As per below example, entire Rs. 3 Lakh cannot be claimed twice – once u/s 24 and the u/s 80EEA.  First claim has to be upto the maximum limit u/s 24 and if there is any unclaimed balance, the same has to be claimed u/s 80EEA, subject to a maximum of Rs. 1.50 Lakhs.

 

For Ex: If a person has interest on housing loan of Rs. 3,00,000/- and it is self occupied, then he first has to claim deduction u/s 24 of Rs. 2,00,000/- and balance Rs. 1,00,000/- can be claimed u/s 80EEA.

 

Suppose the house is let out and interest of Rs. 3,00,000/- has been entirely claimed u/s 24, then no deduction will be allowed u/s 80EEA.

 

2.     Deduction u/s 80EEA can be claimed till repayment of home loan.

 

3.     Section 80EEA of the Act does not mention any restriction on the carpet area, the section is reproduced below.  Hence, subject to fulfilment of the below conditions, deduction u/s 80EEA can be claimed.  The section does not mention restriction on carpet area anywhere.